Merchants allowed to charge fee to credit card customers

Retailers reacted with resignation as a new surcharge on some credit-card transactions took effect last week.

James Haggerty

Retailers reacted with resignation as a new surcharge on some credit-card transactions took effect last week.

"The fees are equaling roughly a couple percent of your business, and that is what you are faced with. I have no option," said Rocco Cianflone, owner of Glint of Gold, a Scranton jewelry shop.

"The retailer has been paying fees for years," said Ken Marquis, owner of Marquis Art and Frame, which operates boutiques in Scranton and Wilkes-Barre. "It's a cost we have endured since the beginning of time."

A settlement last summer ending litigation involving banks, MasterCard and Visa allows merchants to charge customers up to 4 percent of a total bill for credit-card purchases to recover their processing expenses.

The new fees, which took effect last Sunday, are banned in 10 states, including California, Florida, New York and Texas, but they are allowed in Pennsylvania.

Shoppers reacted warily to the possibility of higher fees.

Scranton resident Nancy Prall, 69, said stores that choose to tack on the charge may see shoppers exercising their own options.

"If they want to mark up the price then you have the choice whether you want to buy that (product)," she said. "I'll just go without before I have to pay that."

She believes that many will start making more cash purchases.

"I think you spend enough on items," she said. "Stores should be glad that we're using them."Terry Fofi, 49, said she normally shops with her credit card, but the new charge will curb that habit."It will change how I shop, definitely," she said. "I would probably start using more cash than credit card."

The Carbondale resident said she believed she wouldn't be the only consumer to do so.Some local businesses will not pass on the charges, citing fairness to customers.

"We would not impose a fee," said Katie Gilmartin, a partner at Nada and Company, a Scranton women's apparel shop. "Accepting a credit card is just the way of doing businesses. As a retailer, you have to absorb those fees."The new costs eventually are expected to find their way to consumers.

"It's a trickle-down. Who ends up paying for this? The consumer," Marquis said.

"Probably, we will see most retailers swallowing this or incorporating it into prices," said Chris DeRitis, Ph.D., a consumer credit expert at Moody's Analytics, a West Chester research and consulting company. "If you put in an explicit credit-card checkout fee, you will get consumers revolting."

Retailers who impose the new charge must disclose it on customer receipts -- typically from 1.5 percent to 3 percent of the credit-card purchase -- and post signs revealing it. The levy affects only purchases made with credit and charge accounts, not debit cards, according to Consumer Action, a San Francisco-based public advocacy group.

"It's costing retailers a couple percent and you can't go to the customer and say, 'I have to charge you a couple percent.' It's ridiculous," said Howard Davidowitz, a New York retail consultant. "You have to be creative so you don't get the customer upset."